Former North Carolina Resident Pleads Guilty to Money Laundering Conspiracy

CHARLOTTE, NC— A former North Carolina resident pleaded guilty to conducting a money laundering conspiracy in connection with the $32.5 million Queen Shoals Ponzi scheme announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Gary D. Martin, 60, of St. Augustine, Fla. entered his guilty plea on Wednesday, February 8, 2012, before U.S. Magistrate Judge David C. Keesler.

Joining U.S. Attorney Tompkins in making today’s announcement are Chris Briese, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, and the North Carolina Secretary of State Elaine F. Marshall.

A criminal bill of information filed on January 25, 2012, charged Martin with engaging in a money laundering conspiracy in connection with the Queen Shoals Ponzi scheme. According to court documents and court proceedings, on or about December 2007, Martin formed Queen Shoals Consultants, LLC (QSC) in North Carolina. Thereafter, Martin and others induced victims to invest over $28.5 million in the Queen Shoals Ponzi scheme operated by Sidney Hanson. Although Hanson never directly told Martin that Queen Shoals was a Ponzi scheme, Martin induced victims to invest in the Queen Shoals Ponzi scheme through a series of false and fraudulent representations, omissions of material facts and deceptive half truths. Specifically, Martin admitted to falsely claiming that QSC had over 20 years experience in financial services and international finance and that he had a vast background in financial services, including the silver, gold, and foreign currency trading markets. In truth and fact, Martin had no such experience, held no professional licenses related to finance or investments, and never had engaged in any silver, gold, or foreign currency trading.

According to court documents, Martin, through the QSC website and other means, also made false claims about, among other things, QSC’s financial expertise in “Self-Directed IRA Strategies and Fixed Rate Accounts.” Martin held QSC out as “leaders in Professional Private Placement Retirement Planning” and claimed that QSC had a “proven method of diversification [that] spreads the risk nicely for a balanced portfolio.” In truth and fact, QSC offered no such diversification, funneled victim funds solely into the Queen Shoals Ponzi scheme, and had received no recognition as “leaders in Professional Private Placement Retirement Planning.” Martin admitted that he routinely vouched for the success and reliability of Queen Shoals by claiming to have personally invested a significant amount of his own money into Queen Shoals. On at least one occasion, Martin claimed that he invested his retirement life savings in Queen Shoals. In truth and fact, while Martin and others induced victims to invest over $28.5 million in Queen Shoals through QSC, Martin personally invested only $4,000.

According to the plea agreement and other filed documents, Martin engaged in money laundering transactions by utilizing the referral fees he received from Hanson to pay commissions to himself and the so-called QSC consultants. From in or about 2007 to in or about 2009, Martin received over $1.9 million in referral fees from Hanson and paid the consultants over $1.5 million during the relevant time period in return for inducing victims to invest in the Queen Shoals Ponzi scheme. These payments caused QSC consultants to induce additional victims to invest in the Queen Shoals Ponzi scheme, thereby perpetuating the scheme.

The bill of information filed against Martin includes a notice of forfeiture, which gives notice that the defendant must forfeit to the United States all of the property involved in the offenses charged in the information, and all property which is proceeds of such offenses.

Martin, who was charged with and pled guilty to one count of money laundering conspiracy, has been released on bond. At sentencing, he faces a maximum of 10 years’ imprisonment and a $250,000 fine or a fine of not more than twice the amount of criminally derived property involved in the money laundering conspiracy. A sentencing date has not been set yet.

Martin’s guilty plea is the second conviction arising from the Queen Shoals Ponzi scheme investigation. Sidney Hanson pled guilty to securities fraud and wire fraud and was sentenced on March 31, 2011 to 22 years in prison by Chief U.S. District Judge Robert J. Conrad, Jr.

The case was investigated by the FBI with assistance from the Securities Division of the North Carolina Department of the Secretary of State. U.S. Attorney Tompkins also acknowledges the invaluable assistance provided by the Commodities Futures Trading Commission and the Florida Office of Financial Regulation, Bureau of Financial Investigations in this case. The prosecution is handled by Assistant United States Attorney Mark T. Odulio, of the U.S. Attorney’s Office in Charlotte.”

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.